Whole in one? New Frontier briefing assesses what Whole System Costs means for energy policy

Frontier Economics has today published a new briefing ‘Whole in one?’ which provides guidance to European policy makers on how best to account for the different system cost implications of power generation and storage technologies.

Efforts to reduce power sector emissions have led to far greater diversity in developers’ costs on the wider power system than was the case for traditional plant. At present however, they are often not exposed to these wider cost differences. Separately, the European Commission is keen that future decisions on which technologies to build are taken through market mechanisms. In combination, this risks investment in projects with low bids, but in which higher costs are simply hidden elsewhere in the system.

This briefing demonstrates both the scale of these effects and suggests that the solution lies in the use of well-designed charging frameworks and energy market regimes applied universally to generation, storage and demand, rather than through selective adjustments to existing support regimes.

Frontier regularly advises public and private sector organisations on energy market design and on the scale and nature of whole system costs.